How to Make Corporations People-Friendly
Many of us have been complaining for a long time about the terrible so-called external effects caused by corporations: Environmental degradation, neighborhood ruination, human rights destruction and employee destitution. According to Robert Hinkley, a former corporate securities attorney, corporations behave this way because of corporate law. Change the law, he says, and corporations could become people-friendly. Hinkley has a great idea.
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After 23 years as a corporate attorney, Hinkley says in this Business Ethics article, he realized that businesses disregard the public interest because they follow the law, which essentially says:
"...the directors and officers of a corporation shall exercise their powers and discharge their duties with a view to the interests of the corporation and of the shareholders.... "
So they concentrate on whatever brings more money to shareholders - to the exclusion of everything else. This law makes corporations money mad. The public interest does not even get considered. It is an externality.
What is the solution? According to Hinkley, we must change corporate law so that it makes the corporation consider the public interest. He thinks a simple change in the law would do the job. He would add the following to the above legal statement:
"... but not at the expense of the environment, human rights, the public safety, the communities in which the corporation operates or the dignity of its employees."
Today, corporations are concerned only with making money. In the process, they destroy many wonderful things people enjoy - including their health. I and many others have always felt that this was due to the excessive greed of corporate leaders. I do not think a change in corporate law would get rid of greed. But a change such as Hinkley recommends would allow corporate people with social consciences to exert their influence in favor of the public interest. Maybe corporations would become more people-friendly.
